The Securities and Exchange Board of India (SEBI) has introduced a revised framework to address technical glitches in the online trading systems of stockbrokers, aiming to ensure smoother operations while reducing the compliance burden on smaller players.

Clearer Definition of ‘Technical Glitch’

Under the new proposal, only disruptions that directly impact client services during market hours will be treated as technical glitches. Issues occurring after trading hours or outside the broker’s control have been excluded from the definition. Until now, any malfunction within a broker’s electronic system was broadly categorized as a technical glitch.

Relief for Small Brokers

SEBI has also offered compliance relief to smaller brokers, exempting those with fewer than 10,000 clients (as of March 31 of the previous financial year) from the framework. Around 457 brokers are expected to benefit from this exemption, a move that recognizes their relatively modest infrastructure and limited technological exposure.

Penalties to Be Rationalized

The regulator further clarified that penalties will not apply in cases where glitches cause only minor operational issues without affecting uninterrupted investor services. SEBI has asked stock exchanges to simplify the penalty structure and publicly disclose instances of technical disruptions to ensure greater transparency.

Stronger Infrastructure Planning

With India witnessing a surge in retail investor participation, SEBI underlined the growing responsibility of trading platforms to handle increasing volumes. Brokers have been urged to strengthen capacity planning by monitoring peak loads across trading applications, servers, and network systems. The objective is to enhance resilience and continuity in trading services.

SEBI’s latest move highlights a balanced approach—strengthening investor protection and system reliability while ensuring that smaller stockbrokers are not overburdened with compliance requirements.